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The Role of Investor Relations and Good Corporate Governance on Firm Performance in the Case of the Companies Listed on the Bucharest Stock Exchange

Author

Listed:
  • Bogdan Aurelian Mihail

    (Doctoral School of Finance, Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania)

  • Dalina Dumitrescu

    (Department of Finance, Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania)

  • Daniela Serban

    (Doctoral School of Finance, Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania)

  • Carmen Daniela Micu

    (Department of Masters in Board Practice and Directorship, Henley Business School, University of Reading, Greenlands Campus, Henley-on Thames, Oxfordshire RG9 3AU, UK)

  • Adriana Lobda

    (Department of Masters in Board Practice and Directorship, Henley Business School, University of Reading, Greenlands Campus, Henley-on Thames, Oxfordshire RG9 3AU, UK)

Abstract

The objective of this paper is to investigate the role of Investor Relations (IR) in the performance of companies listed on the Bucharest Stock Exchange. The study is motivated by the findings in the literature that investor relations may boost information disclosure, analyst following, institutional investor share, liquidity, and business valuation. The current article contributes to the relevant literature by making use of the recently released unique database of VEKTOR scores on company investor relations for 2019 and 2020. The main finding based on regression methodology shows that IR scores have a strong positive relationship with firm performance. Specifically, a one standard deviation rise in the IR score corresponds to a 2.6% rise in company ROA. Companies may be advised to strengthen their investor relations based on these findings about the beneficial role of investor relations.

Suggested Citation

  • Bogdan Aurelian Mihail & Dalina Dumitrescu & Daniela Serban & Carmen Daniela Micu & Adriana Lobda, 2021. "The Role of Investor Relations and Good Corporate Governance on Firm Performance in the Case of the Companies Listed on the Bucharest Stock Exchange," JRFM, MDPI, vol. 14(12), pages 1-12, November.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:12:p:569-:d:687053
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    References listed on IDEAS

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    1. Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003. "Corporate governance and control," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109, Elsevier.
    2. Michael J. Brennan & Claudia Tamarowski, 2000. "Investor Relations, Liquidity, And Stock Prices," Journal of Applied Corporate Finance, Morgan Stanley, vol. 12(4), pages 26-37, January.
    3. Monica-Violeta Achim & Sorin-Nicolae Borlea & Codruţa Mare, 2016. "Corporate Governance and Business Performance: Evidence for the Romanian Economy," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 17(3), pages 458-474, June.
    4. Lucian Bebchuk & Alma Cohen & Allen Ferrell, 2009. "What Matters in Corporate Governance?," The Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 783-827, February.
    5. McCahery Joseph A. & Vermeulen Erik P.M. & Hisatake Masato, 2013. "The Present and Future of Corporate Governance: Re-Examining the Role of the Board of Directors and Investor Relations in Listed Companies:," European Company and Financial Law Review, De Gruyter, vol. 10(2), pages 117-163, June.
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    Cited by:

    1. Cosmin-Ionuț Boșcu & Maria Francesca Poll & Raluca-Andreea Popescu-Predulescu, 2022. "Impact of financial indicators on the VEKTOR score by categories of listed companies," Journal of Financial Studies, Institute of Financial Studies, vol. 12(7), pages 65-76, May.

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